So you’ve decided your brand could use a little shine, and you’re considering hitching your brand to a star. You are presumably a fan of the celebrity, and with a little luck, it’s mutual. Whether this is a short-term “hook up” for a single event or seasonal promotion or a potentially long term “marriage,” there are a few things to keep in mind to avoid a cosmic crash when seeking a celebrity endorsement.

The services and the rights

Does the celebrity have to actually do anything other than permitting use of a name and likeness? If so, spell out the specifics: e.g., photo or film shoots, voice taping sessions, appearances at events or trade shows. Where, when and how often? Will any services be subject to guild jurisdiction for taping radio or TV commercials (e.g., Screen Actors Guild, American Federation of Musicians, etc.)?

What will be most effective in promoting the brand or event? Consider what use of the celebrity’s name and image as well as which media will be most effective in reaching your audience: print, TV, radio, billboards, websites, mobile apps, Twitter feeds, etc. The audience for your brand (age, gender, geographic location, etc.), whether it’s the celebrity’s fan base, a niche demographic, or the general public, may also help determine what the contract with the celebrity needs to cover. Keep in mind that case law and the Federal Trade Commission require the celebrity disclose any commercial relationship with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.

Think about whether you want an express endorsement where the celebrity is shown using or praising your product or services, or a soft (i.e. “indirect”) endorsement where the celebrity name or photograph appears in your advertisement, but without a direct link to the product? FTC guidelines provide that in direct endorsements, the celebrity must actually be a client or user of the endorsed service or product.

Will the celebrity have any right to approve the scope of the endorsement (selected photographs or film, the ad, or commercial layout) or elements of the product? This may be important to the celebrity in light of revised guidelines that place liability on both the brand owner and the celebrity for false claims in an endorsement.

If the celebrity’s name or likeness will appear on the product or its packaging, or will become part of the brand (e.g., “George Forman Grill”), who will own the trademark rights, and what happens to that brand after the endorsement contract is over? Licensing a longer-term use of the celebrity’s name as a permanent part of a brand or expanding the endorsement to several products or even the whole company is likely to change the price point and other material items of the contract.

Other factors to consider:

Where will the campaign appear – local, regional, national, international?

Do you want to restrict endorsements for competing products/companies/markets?

Do you need confidentiality and non-disparagement provisions to protect the brand (or the celebrity)?

One area of tension can be that most brand owners entering into endorsement agreements will insist that the celebrity waive any right to stop distribution or advertising of the product or service if a dispute arises, while the celebrity will typically insist that mere money can’t compensate for reputational damage if something goes awry with the product, the promotional campaign, etc. Also consider that deals with celebrity musicians will generally require separate negotiation with a record label and music publisher for use of the celebrity’s recordings and musical compositions (so-called “master” recording use and “synchronization” licenses) for inclusion of music in the celebrity’s commercials.

Term and termination

What’s the initial period (short for an event/season or perhaps for a year or longer)? Keep in mind that once a celebrity or expert has endorsed a product, the advertiser has an obligation to make sure the endorsement continues to reflect the endorser’s opinion. If it doesn’t, what sorts of “out clauses” will the parties require? Since the goal is to tie the brand and the persona together, changes in the celebrity’s appearance, behavior, artistic or athletic reputation, or activities may be triggers for terminating the contract. Likewise, the celebrity may need an out in the event that the brand’s “behavior” or reputation (e.g., a product recall, major lawsuit or corporate scandal) tarnishes the image of the celebrity linked to it.

Show me the money

Recently revised FTC guidelines require that “material connections” (payments of cash or free products) between advertisers and endorsers – connections the FTC believes consumers have a right to know about in making purchase choices – must be disclosed. Both the brand owner and the celebrity may be liable for failure to disclose material connections between the advertiser and endorsers.

Endorsement agreements can be for fixed, all-in fees, where payments are tied to actual work/appearance days, and/or the launch of a single buyer ad/media campaign or product, etc. for a fixed duration. Structuring compensation can be creative (and sometimes complex): you can fix a set price, include a percentage of gross or net revenue associated with the company or product, set an initial fee as an advance against some contingent royalty or bonus, or utilize some combination of these strategies to build incentives into the contract for both parties to incentivize their performance.

If the deal is for an extended length of time, you can build in increases in guaranties and royalties over time, or tie performance bonuses to the brand’s or product’s success, which can be measured by sales or other revenue targets. Or, you can structure performance bonuses based on the celebrity’s success. A celebrity athlete being named MVP, or an artist being nominated for or winning an Emmy, Oscar or Grammy, whether he’s wearing your athletic shoes or wristwatch or driving your car to the red carpet or not, may add to the brand’s cache if he or she has endorsed it.

Be sure to also address housekeeping items like expense budgets, reimbursements, and accounting and audit rights. A celebrity contemplating the deal will take into account perceived value to him/her in forfeited “opportunity costs” (other deals that may have to be rejected because of scheduling, territory or category exclusions, for example), as well as how the engagement will impact his/her image and fan base (i.e., is the tie-in a natural extension of the celebrity’s own brand, or will it be perceived as a “sell out”?). There are licensing consulting services that publish annual surveys of royalty structures and typical percentages for endorsement deals, as well as agencies that serve as matchmakers for these relationships, which are worth consulting in advance.

Latest Posts

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

- hide

Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.